The award, given by the Poetry Book Society (PBS) which was founded by Eliot in 1953, is regarded as one of the most prestigious in poetry.
Collins has been nominated for his anthology Nine Horses.
Others on the list include Don Paterson, who previously won the prize in 1997, and two women, Jean Sprackland and Lavinia Greenlaw.
The prize was inaugurated in 1993 to mark the 40th anniversary of the society and honour its founding poet.
It has been described by UK Poet Laureate Andrew Motion as "the prize most poets want to win".
Previous recipients have included Ted Hughes, Hugo Williams and Anne Carson.
The winner will receive £10,000, in a ceremony to take place in central London on 19 January.
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